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LAWS OF MALAYSIA
Act 701
CENTRAL BANK OF MALAYSIA ACT 2009
Laws of Malaysia
ACT 701
...
...
19 August 2009
...
3 September 2009
1.
2.
Interpretation
PART II
THE BANK, ITS OBJECTS AND FUNCTIONS
3.
4.
5.
6.
Capital
7.
8.
Financial year
9.
10.
Accounting standards
11.
External audit
12.
13.
14.
Board of Directors
15.
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ACT 701
Section
16.
Appointment of director
17.
18.
19.
Meetings of Board
20.
Disclosure of interest
21.
Board committees
PART V
MONETARY FUNCTIONS AND OPERATIONS OF THE BANK
22.
Monetary policy
23.
24.
25.
26.
Chapter 1
Powers for promoting financial stability
27.
28.
29.
Interpretation
30.
31.
32.
33.
Due diligence
34.
35.
36.
37.
38.
39.
Nature of relief
40.
Section
41.
42.
Confidentiality
Chapter 2
Money market and foreign exchange market
43.
44.
The Bank may establish system for funds, debt securities, etc.
Chapter 3
Financial services and other functions
45.
46.
47.
Credit bureau
48.
49.
50.
Chapter 1
Shariah Advisory Council
51.
52.
53.
54.
55.
56.
57.
58.
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ACT 701
Chapter 2
Powers of the Bank
Section
59.
60.
61.
Unit of currency
62.
63.
Legal tender
64.
65.
66.
67.
68.
69.
70.
71.
72.
Issues of policy
PART XI
OTHER POWERS OF THE BANK
73.
74.
75.
Section
76.
77.
78.
79.
International co-operation
80.
81.
82.
83.
84.
85.
86.
Preservation of secrecy
87.
Immunity
88.
89.
Power to compound
90.
Prosecution
91.
92.
93.
94.
95.
96.
Exemptions
Laws of Malaysia
Section
97.
98.
99.
100.
Repeal
Savings and transitional
FIRST SCHEDULE
SECOND SCHEDULE
THIRD SCHEDULE
ACT 701
LAWS OF MALAYSIA
Act 701
CENTRAL BANK OF MALAYSIA ACT 2009
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ACT 701
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PART II
THE BANK, ITS OBJECTS AND FUNCTIONS
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Capital
6. (1) The capital of the Bank shall be one hundred million
ringgit.
(2) The capital may be increased by such amount as the
Minister may approve from time to time and the Government shall
subscribe and pay the amount of the increase to the Bank.
(3) The payment of the increase in capital referred to in
subsection (2) may be made by way of transfer from the General
Reserve Fund as the Minister may from time to time approve.
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Board of Directors
14. (1) There shall be a Board of Directors of the Bank.
(2) The Board shall
(a) be responsible for the general administration of the affairs
and business of the Bank and the approval of the budget
and operating plan of the Bank;
(b) have oversight of the management of the Bank and keep
under constant review the performance of the Bank in
giving effect to its objects, carrying out its functions
and the use of the resources of the Bank; and
(c) be responsible for such other matters as provided under
this Act.
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Monetary policy
22. (1) In promoting monetary stability, the Bank shall pursue
a monetary policy which serves the interests of the country with
the primary objective of maintaining price stability giving due
regard to the developments in the economy.
(2) The monetary policy of the Bank shall be formulated and
implemented autonomously by the Bank, without any external
influence.
Monetary Policy Committee
23. (1) There shall be a committee of the Bank to be known as the
Monetary Policy Committee which shall have the responsibility
for formulating the monetary policy and the policies for the
conduct of monetary policy operations.
(2) The Monetary Policy Committee shall consist of the
Governor, the Deputy Governors and not less than three but not
more than seven other members.
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PART VI
FINANCIAL STABILITY FUNCTIONS AND POWERS
OF THE BANK
Chapter 1
Powers for promoting financial stability
Dual financial system
27. The financial system in Malaysia shall consist of the
conventional financial system and the Islamic financial system.
Financial stability powers under the laws
28. The powers conferred upon the Bank under this Act and the
written laws set out in the Second Schedule are for the purposes
of promoting financial stability.
Interpretation
29. For the purposes of this Chapter, risk to financial stability
means a risk which in the opinion of the Bank disrupts, or is
likely to disrupt, the financial intermediation process including
the orderly functioning of the money market and foreign exchange
market, or affects, or is likely to affect, public confidence in the
financial system or the stability of the financial system.
Information for purposes of financial stability
30. (1) In the interest of financial stability, the Bank may request
any supervisory authority or Government agency in Malaysia
overseeing the following persons to submit to the Bank any
information or document relating to the activities, financing,
accounts, transactions, customers accounts or any other information
of such persons which the Bank considers necessary for giving
effect to the financial stability object under this Act:
(a) any financial institution;
(b) any participant, intermediary, exchange, depository or
provider of clearing, settlement or other services in the
financial markets;
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(c) any other person which in the opinion of the Bank may
pose a risk to financial stability; or
(d) any related corporation of a person referred to in paragraph
(a), (b) or (c).
(2) Where any person referred to in paragraph (1)(a), (b), (c)
or (d) is not under the supervision or oversight of any supervisory
authority or Government agency, the Bank shall by order in
writing require such person to submit the information or document
required under subsection (1).
Order for financial stability
31. (1) Where the Bank considers it necessary in the interest
of financial stability, the Bank may issue an order in writing
requiring any person to take such measures as the Bank may
consider necessary or appropriate to avert or reduce any risk to
financial stability.
(2) Before issuing an order under subsection (1), the Bank
shall give the person an opportunity to make representation.
(3) N o t w i t h s t a n d i n g s u b s e c t i o n ( 2 ) , a n o r d e r u n d e r
subsection (1) may be issued first and the opportunity to make
representations shall be given immediately after the order has
been issued if any delay would aggravate the risk to financial
stability.
(4) An order issued under subsection (1) may be amended
or modified where the representation is made after the order is
issued.
(5) Any person who fails to comply with subsection (1)
commits an offence and shall, on conviction, be liable to a fine
not exceeding ten million ringgit or to imprisonment for a term
not exceeding ten years or to both.
Power for averting or reducing risk to financial stability
32. (1) Without prejudice to section 31, the Bank may, for the
purpose of averting or reducing any risk to financial stability
(a) provide liquidity assistance to any financial institution;
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(4) A n y o r d e r i s s u e d u n d e r s u b s e c t i o n 3 1 ( 1 ) o r
subparagraph 32(1)(c)(iii) shall have effect in accordance with the
provisions of this Part and, notwithstanding any legal proceedings
instituted pursuant to subsection (2), shall be binding on any
person to whom the order is issued.
Arrangements with other supervisory authorities
40. (1) For the purposes of promoting financial stability, the
Bank may
(a) enter into arrangements to co-operate with other supervisory
authorities and co-ordinate financial stability measures
with such supervisory authorities; and
(b) obtain any information or document from, or share any
information or document with, any other supervisory
authority if the Bank considers it necessary that such
information or document be so obtained or shared.
(2) Where the Bank shares any information or document under
paragraph (1)(b)
(a) with any supervisory authority in Malaysia, such information
or document shall not be disclosed to any person except
with the written consent of the Bank; or
(b) with any supervisory authority outside Malaysia, such
supervisory authority shall give an appropriate undertaking
for protecting the confidentiality of such information or
document and the purposes for which the information
or document may be used.
Advice or recommendations on financial stability to supervisory
authorities
41. The Bank may, in the interest of financial stability advise, or
make recommendations to any supervisory authority in Malaysia
on
(a) the implications of any written law, policies or measures
proposed by such authority which may affect financial
stability; and
(b) appropriate measures or safeguards to take for purposes
of promoting financial stability.
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Confidentiality
42. (1) Except as provided in paragraph 40(1)(b) and section 86,
any information or document submitted by any person under
section 30 shall be confidential as between the person and the
Bank.
(2) Any person who is required to submit any information
or document under section 30 and any supervisory authority in
Malaysia from which information or document is to be obtained by
the Bank under paragraph 40(1)(b) shall provide such information
or document, notwithstanding the provisions of any written law
whether enacted before or after the commencement of this Act or
any oath, undertaking, or requirement of secrecy to the contrary
or of any obligation under any contract, agreement or arrangement
whether express or implied to the contrary.
(3) Any person shall not, in complying with the requirement
to submit any information or document under subsection (2), be
treated as being in breach of any such contract, agreement or
arrangement.
Chapter 2
Money market and foreign exchange market
Rules, guidelines, etc., for money market, etc.
43. (1) The Bank may issue rules, codes, standards, principles or
guidelines for the purposes of regulating, developing, or maintaining
orderly conditions or the integrity of, the money market, the
foreign exchange market or the market for the derivatives related
to the currencies, securities and other financial instruments traded
in these markets.
(2) Without prejudice to the generality of subsection (1), rules,
codes, standards, principles or guidelines may be issued in respect
of the money market, the foreign exchange market or the market
for the derivatives related to the currencies, securities and other
financial instruments traded in these markets
(a) to ensure orderly dealings in such markets;
(b) to impose obligations and duties on participants of such
markets or any system established or operated, including
those pursuant to subsection 44(1); and
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Chapter 3
Financial services and other functions
Co-operation with financial institutions
45. The Bank shall use its best endeavours in co-operation with
financial institutions in Malaysia to
(a) promote and maintain banking and financial services for
the public; and
(b) foster high standards of banking and finance in
Malaysia.
Clearing houses and settlement of balances between financial
institutions
46. (1) In order to facilitate the clearing of cheques and other
credit or payment instruments for financial institutions or any person
approved by the Bank, the Bank or any body corporate established
or acquired under paragraph 48(1)(c) may, at an appropriate time
and in conjunction with such institutions or person, establish a
clearing house in Kuala Lumpur and in such other place as the
Bank or the body corporate may consider necessary.
(2) A financial institution or any person approved by the Bank
shall settle, in such manner as the Bank or the body corporate
may from time to time specify by notice in writing, all balances
between itself and any other financial institution or any person
approved by the Bank arising out of the general clearances effected
in Kuala Lumpur and such other places as the Bank or a body
corporate established or acquired under paragraph 48(1)(c) may
specify.
Credit bureau
47. (1) The Bank may establish a credit bureau to collect, in such
manner and to such extent as the Bank thinks fit, credit information
(including information on and relating to the rejection of any
cheque by a paying bank by reason of insufficiency of funds in
the account of the drawer of the cheque) or any other information
which the Bank considers relevant in the assessment of the
creditworthiness of the customers of any financial institution.
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Chapter 1
Shariah Advisory Council
Establishment of Shariah Advisory Council
51. (1) The Bank may establish a Shariah Advisory Council on
Islamic Finance which shall be the authority for the ascertainment
of Islamic law for the purposes of Islamic financial business.
(2) The Shariah Advisory Council may determine its own
procedures.
Functions of Shariah Advisory Council
52. (1) The Shariah Advisory Council shall have the following
functions:
(a) to ascertain the Islamic law on any financial matter and
issue a ruling upon reference made to it in accordance
with this Part;
(b) to advise the Bank on any Shariah issue relating to Islamic
financial business, the activities or transactions of the
Bank;
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(3) Any person who fails to comply with any circulars, guidelines
or notices issued by the Bank under subsection (1) commits an
offence and shall, on conviction, be liable to a fine not exceeding
three million ringgit.
Promotion of Malaysia as an international Islamic financial
centre
60. (1) The Bank shall, in co-operation with the Government or
any Government agency, statutory body, supervisory authority or
international or supranational organization, develop and promote
Malaysia as an international Islamic financial centre.
(2) For the purposes of subsection (1), the Bank may
(a) establish a secretariat or other committees to assist the
Government or any organization, council, agency or
committee established by the Government; and
(b) generally take such measures or facilitate such actions
or provide financing,
as may be necessary for the development and promotion of
Malaysia as an international Islamic financial centre.
PART VIII
CURRENCY
Unit of currency
61. (1) The unit of currency in Malaysia shall be the ringgit,
which shall be divided into one hundred sen.
(2) The abbreviated form of the ringgit shall be RM or
MYR.
Right to issue, print or mint currency
62. (1) The Bank shall be the sole authority to issue currency
notes and coins in Malaysia and such notes and coins shall only
be printed or minted by or under the authority of the Bank.
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PART IX
FOREIGN RESERVES
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resident means
(a) a citizen of Malaysia, excluding a citizen who has obtained
permanent resident status in a country or territory outside
Malaysia and is residing outside Malaysia;
(b) a non-citizen of Malaysia who has obtained permanent
resident status in Malaysia and is ordinarily residing in
Malaysia;
(c) a body corporate incorporated or established, or registered
with or approved by any authority, in Malaysia;
(d) an unincorporated body registered with or approved by
any authority in Malaysia;
(e) the Government or any State Government; or
(f) any other person as may be specified by the Bank to be
a resident;
securities means shares, stock, bonds, notes (other than
promissory notes), debentures, debenture stock, units under a unit
trust scheme, shares in an oil royalty, a secondary security and
coupons whether in scripless form or in bearer certificates, including
certificates of title to securities or any letter of allotment which
may be renounced, any letter of rights, any warrants conferring
an option to acquire a security, any deposit certificate in respect
of securities and such other documents conferring, or containing
evidence of, rights to securities as the Bank may prescribe;
transactions include
(a) buying or selling;
(b) borrowing or lending;
(c) payment, transfer or settlement;
(d) issuance, transfer or substitution of securities;
(e) giving or obtaining financial guarantee, indemnity or
similar undertaking in respect of any debt, obligation
or liability;
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International co-operation
79. The Bank may
(a) participate in any arrangement, scheme, programme or
initiative with any other central banks, monetary authorities
or international financial institutions or authorities outside
Malaysia to promote bilateral, regional and international
monetary, financial or economic co-operation; or
(b) with the approval of the Minister on the recommendation
of the Board, fund or provide financing in whole or in
part for the arrangement, scheme, programme or initiative
referred to in paragraph (a).
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PART XIV
GENERAL
Preservation of secrecy
86. (1) Without prejudice to section 88, and except for the
purpose of the performance of his duties or the carrying out of
his functions or when lawfully required to do so by any court
or under any law, no person who is or has been director, officer,
or employee of the Bank or member of the Shariah Advisory
Council or any committee appointed under this Act shall disclose
to any person any information relating to the business or affairs
of the Bank or of a financial institution or of a customer of the
Bank or of a financial institution which he has acquired in the
performance of his duties or the carrying out of his functions.
(2) Any person who fails to comply with subsection (1)
commits an offence and shall, on conviction, be liable to a fine
not exceeding three million ringgit or to imprisonment for a term
not exceeding three years or to both.
Immunity
87. (1) No action, suit, prosecution or other proceeding shall lie
or be brought, instituted, or maintained in any court or before
any other authority against
(a) any officer or employee of the Bank;
(b) any person lawfully acting on behalf of the Bank, or on
behalf of any such officer or employee, in his capacity
as a person acting on such behalf; or
(c) any person appointed pursuant to this Act,
for or on account of, or in respect of, any act done or statement
made or omitted to be done or made, or purporting to be done or
made, in pursuance or in execution of, or intended pursuance or
execution of, this Act, any order in writing, direction, instruction,
notice or other thing issued under this Act:
Provided that such act or such statement was done or made,
or was omitted to be done or made, in good faith.
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Repeal
99. The Central Bank of Malaysia Act 1958 is repealed.
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Quorum
(1)
(2)
Frequency of
meetings
(3)
Board
Governance
Committee
At least two
times a year
Board Audit
Committee
At least four
times a year
Board Risk
Committee
At least two
times a year
Monetary Policy
Committee
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SECOND SCHEDULE
[Section 28]
1.
2.
3.
4.
5.
6.
7.
8.
THIRD SCHEDULE
[Section 36]
Interpretation
1.
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obligor means any person who owes a duty or obligation of any nature,
whether present or future, or whether vested or contingent, to the transferor
under or with respect to an asset, including without limitation, an obligor
under any financing or security arrangement or other chose-in-action;
registered interest means any right or interest
(a) in a charge to which section 108 of the Companies Act 1965 applies
and is duly registered in accordance with that section;
(b) in land which is duly registered under the Strata Titles Act 1985, the
National Land Code, the Land Ordinance relating to the State of
Sabah or the Land Code relating to the State of Sarawak;
(c) in a ship which is duly registered under the Merchant Shipping
Ordinance 1952 [Ord. 70/1952]; or
(d) duly registered under any other law or under foreign law;
Registration Authority includes
(a) the registrar of any court;
(b) the Registrar of Companies as designated under subsection 7(1) of
the Companies Act 1965;
(c) the Registrar as defined under section 5 of the National Land Code,
the Registrar as defined under section 4 of the Land Ordinance
relating to the State of Sabah or the Registrar under the Land Code
relating to the State of Sarawak, as the case may be;
(d) the registrar of Malaysian ships appointed under subsection 14(1) of
the Merchant Shipping Ordinance 1952 and includes the Registrar
General of Ships as appointed under subsection 14(1) of the Ordinance;
or
(e) a central depository, an authorized depository agent or any person
maintaining a register or record of ownership, interest or security;
transferee has the same meaning assigned to it in subsection 36(18);
transferor has the same meaning assigned to it in subsection 36(18);
vesting date means the date stated on a vesting order as the date on
which any business, assets, liabilities, or shares or other capital instruments
vest or are deemed to vest in the transferee;
vesting order means an order made under subparagraph 32(1)(c)(iii)
and includes a replacement vesting order made under paragraph 11 of this
Schedule.
Vesting order
2. (1) Where the Bank makes a vesting order, the vesting order shall be in
accordance with this Schedule.
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(2) A vesting order may be in such form as determined by the Bank from
time to time and shall take effect in accordance with this Schedule.
(3) A vesting order stating that any business, assets, liabilities, shares or
other capital instruments to be vested shall be conclusive evidence of such
vesting as of the vesting date.
(4) Where a vesting order is made, the transferor and transferee, as the
case may be, shall not be required to
(a) notify or obtain the approval of their shareholders or creditors in a
general meeting or otherwise notwithstanding any contract or law
including without limitation sections 132C, 132D and 132E of the
Companies Act 1965 or anything in their constituent documents;
or
(b) make a take-over offer or be required to acquire the shares of other
shareholders of the transferor or its borrowers notwithstanding
anything to the contrary in any contract or law.
(5) A vesting order may restrict or prevent the termination of any agreements
or transactions in accordance with their terms subject to such conditions as
may be imposed in the vesting order.
(6) A vesting order may make other provisions for the purposes of, or in
connection with, the vesting of any business, assets, liabilities, shares or other
capital instruments of the transferor.
(7) A vesting order may require or permit
(a) a transferor to provide a transferee with information and assistance;
or
(b) a transferee to provide a transferor with information and assistance.
(8) Any person in complying with the vesting order for the purposes of
subparagraph (7) shall not be treated as being in breach of any law, contract,
agreement or arrangement.
(9) The powers under this Schedule are without prejudice to, and in addition
to any other rights and powers of the Bank.
Notice
3. (1) The Bank shall serve the vesting order made under subparagraph 32(1)(c)(iii)
to the transferor and transferee in such manner as the Bank may deem
appropriate.
(2) The directors of a financial institution shall inform the members of the
financial institution that an order under subparagraph 32(1)(c)(iii) has been
made against the financial institution not later than thirty days after the order
has been received by the financial institution.
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(b) the transferor shall be deemed to have been released and discharged
from that liability; and
(c) any depositor, creditor or other person who is owed that liability shall
be deemed to have consented to and accepted the assumption by the
transferee of that liability.
(7) Without prejudice to subparagraphs (1), (2), (3), (4), (5) and (6) in
relation to any business, assets or liabilities, as the case may be, vested in
the transferee
(a) each obligor with respect to such assets, shall be deemed to have
released and discharged the transferor from all the disclosed obligations
with respect to such assets;
(b) any person having any right, title or interest in such assets, shall be
deemed to have consented to and accepted the vesting in the transferee
of all the disclosed obligations with respect to such assets;
(c) an existing agreement or instrument, whether in the form of a deed,
will or otherwise, or order of any court, under or by virtue of which,
the transferor has title or ownership of or rights to such assets shall
be construed and shall have effect as if for any reference in it to
the transferor there were substituted a reference to the transferee;
(d) an existing agreement or instrument in relation to such assets to which
the transferor was a party shall have effect insofar as it is applicable
to the disclosed obligations, disclosed claims and registered interests as
if the transferee had been a party to it instead of the transferor;
(e) an existing instruction, order, mandate, power of attorney, authority,
undertaking or consent in relation to an account which was given
to the transferor, either alone or jointly with another person, shall
be deemed to have effect, as if given to the transferee either alone
or jointly with such other person, as the case may be;
(f) if any security were held immediately before the vesting date by
the transferor, or by a nominee of or trustee for the transferor,
as security for the payment or discharge of any liability of any
person, such security shall be held by the transferee, that nominee
or trustee, as the case may be, as the nominee of, or trustee for, the
transferee with the same priority as the transferor, and to the extent
of that liability, shall be available to the transferee as security for
the payment or discharge of that liability, and if any such security
extends to future advances or future liabilities, shall be held by
and be available to the transferee as security for future advances
by or future liabilities to the transferee in the same manner in all
respects as future advances by or future liabilities to the transferor
were secured thereby immediately before the vesting date;
(g) in addition to any other right, power or remedy granted to the transferee
in this Schedule, the transferee shall have the rights, powers and
remedies (and in particular the rights and powers as to taking or
resisting legal or other proceedings or making or resisting applications
to any authority) for ascertaining, protecting or enforcing the rights,
title, interests and disclosed obligations vested in the transferee
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(h) that the person who executed, is deemed to have executed or who is
a party to, any document of title for the asset or written contract
which evidences, gives rise to or secures the asset or liability did
not have the capacity or the authority to do the same; and
(i) that there is an error in any statement of account issued by the
transferor or any other person in respect of the liability or any debt
to which the assets relate.
Vesting of shares or other capital instruments
5. (1) A vesting order shall provide for the vesting of any shares or other capital
instruments of a financial institution which has ceased to be viable or which
the Bank considers likely to become non-viable under subparagraph 32(1)(c)(iii)
to take effect free from any trust, liability, adverse claim or other
encumbrances.
(2) A vesting order for the vesting of any shares or other capital instruments
may provide for
(a) the extinguishment of rights of holders of warrants or other instruments
that entitle the holder to acquire shares in the financial institution
which has ceased to be viable or which the Bank considers likely
to become non-viable under subparagraph 32(1)(c)(iii);
(b) the financial institution which has ceased to be viable or which the
Bank considers likely to become non-viable under subparagraph
32(1)(c)(iii) to not issue any further shares, warrants, or such other
securities which are convertible or exchangeable into shares in such
financial institution;
(c) any shares or capital instruments of a financial institution which has
ceased to be viable or which the Bank considers likely to become
non-viable under subparagraph 32(1)(c)(iii) to be converted from
one form or class to another; or
(d) the removal from the official list of any stock exchange the shares of
the transferor or a particular class of securities of the transferor.
Preservation of rights
6. (1) A person who is precluded from making a claim against any transferee or
is precluded from raising a defence against that transferee under this Schedule,
shall be entitled to seek compensation against the transferor in respect of such
claim.
(2) Where the court is satisfied that the person referred to in subparagraph (1)
has a claim against the transferor including any prior equitable interest in
the assets which that person could have raised or claimed but is precluded
by subparagraph 4(9) that person shall be entitled to such compensation
from the transferor in respect of such claim as the court considers fair and
reasonable.
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(4) Any act done by a transferee, transferor or any other person, in reliance
of a vesting order previously made shall not be affected by any omission or
error rectified in a replacement vesting order made under subparagraph (1).
(5) For the purposes of this Act, any reference to a vesting order shall
be deemed to include a reference to a replacement vesting order made under
subparagraph (1).
Transfer of foreign assets and foreign liabilities
12. (1) This paragraph applies in relation to foreign assets and foreign liabilities
held by the transferor.
(2) For the purposes of this paragraph
foreign assets means assets of the transferor outside Malaysia;
foreign law means the law of the country or territory outside Malaysia
in which the assets of the transferor are situated or liabilities of the transferor
are to be discharged;
foreign liabilities means the liabilities of the transferor to be discharged
outside Malaysia.
(3) The transferor and transferee shall each take any necessary steps to ensure
that the vesting of any foreign assets or foreign liabilities of the transferor
is effective under foreign law where such vesting is not wholly effective by
virtue of the vesting order.
(4) Until the vesting of foreign assets or foreign liabilities is effective
under foreign law, the transferor shall
(a) hold the assets as a trustee for the benefit of the transferee together
with any additional asset or right accruing by virtue of the original
asset or right; and
(b) discharge any liability on behalf of the transferee.
(5) The transferee must meet any expenses of the transferor in complying
with this paragraph.
(6) An obligation imposed by this paragraph is enforceable as if created
by contract between the transferor and transferee.